If your income tax return (ITR) has been deemed ‘defective’ by the assessing officer (AO), you may receive a notice under Section 139(9) of the Income-tax Act, 1961.
The income tax department could send you a notice for a ‘defective’ return. Here are the reasons why your income tax return could be deemed defective, and the steps you need to take to rectify it and file a revised return
If your income tax return (ITR) has been deemed ‘defective’ by the assessing officer (AO), you may receive a notice under Section 139(9) of the Income-tax Act, 1961.
According to Mayank Mohanka, chartered accountant and founder of TaxAaram.com, the income tax department could consider an ITR defective for multiple reasons.
These could range from details of income and expenditure claims, missing mandatory schedules in the ITR form, failure to furnish a tax audit report as required by Section 44AB, claiming lower income than the prescribed limits under the presumptive tax scheme, unpaid taxes etc., and so on.
Those who have a business income, must file their income tax audit report by September 30, 2023 for FY 2022-23 (AY 2023-24)
The income tax department’s website says that if the AO finds any defect in the income tax return, they will notify the taxpayer and provide an opportunity to rectify it within 15 days or within a stipulated period as allowed by the AO.
Mistakes That Can Lead To Defective ITR
There are several reasons why a return be deemed defective. These include not filling in the annexures, statements and columns related to the computation of income, gross total income, and total income.
The return should also be accompanied by the audit report mentioned in Section 44AB for businesses.
The income tax websites also cites some of the common mistakes.
“The gross receipts shown in Form 26AS, on which credit for tax deducted at source (TDS) has been claimed, are higher than the total of the receipts shown under all heads of income in the return of income. Gross Total Income, and all the heads of income is entered as ‘nil or 0’, but tax liability has been computed and paid,” it says.
Incorrect information in the Annual Information Statement (AIS), such as wrong challan numbers, incorrect TDS information, or discrepancies between income and TDS reported in the return and Form 26AS, can also result in a defective ITR.
Failure to declare income from virtual digital assets (VDAs), non-declaration of dividends, and discrepancies in tax payment can also lead to a defective ITR.
How To Respond To Defective Notice?
To respond to a defective notice, you can log in to the e-filing portal and go to the ‘e-File’ menu. Click on ‘Response to Notice u/s 139(9)’. The portal will display the identified defects from the filed ITR. You can then choose to agree or disagree with it. If you agree, you can upload the correct XML. If you disagree, you can enter your remarks in the ‘Assessee Remarks’ column. Then, click submit.
Mohanka adds: “This window gives the option to file a revised return as the next step if one agrees with the defects. In case of disagreement, the reason for the same needs to be given. The defective return can be rectified by furnishing a revised ITR, and correcting all the defects and omissions in the ITR on receipt of the defective return notice by the income tax department within a period of 15 days from the receipt of such notice.”
To submit a revised return, you can upload the XML files. First, download the appropriate ITR utility from the income tax e-Filing portal. Open the utility, select ‘Revised return under section 139(5)’ as the section, and ‘filing type’ as ‘Revised’. Then fill in the relevant details, generate the XML, and upload it to the e-Filing portal, and e-verify the return.
A response filed in reply to a defective notice will be considered a fresh ITR and will replace the defective return. The deadline for filing a revised return for FY 2022-23 (AY 2023-24) is December 31, 2023.
Failure to respond to the defective return notice within the specified period will result in the ITR being treated as invalid, indicating that you have not filed a return for that assessment year. Non-compliance with the defective notice may lead to penalties, interest, and loss of specific exemptions under the Income-tax Act, 1961.